Additions under Section 68 cannot be sustained based solely on information from the Insight Portal without independent inquiry or evidence establishing a direct link between the assessee's transactions and a known accommodation entry provider.

ORDER

PER AMITABH SHUKLA, AM,

This appeal filed by the Revenue is against order dated 27.11.2024 of learned Commissioner of Income Tax(Appeals)-29, New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 26.03.2022 passed u/s 147 of the Income Tax Act, 1961 pertaining to Assessment Year 2013-14. The word ‘Act’ herein this order would mean Income Tax Act, 1961.

The Revenue has raised following grounds of appeal:-

(i) Whether on the facts & in the circumstances of the case, the Ld. CIT(A) erred in law & on facts in not appreciating the fact that enquiry was made by the A subsequent to receipt of information from INSIGHT portal from the assessee to verify whether the transactions undertaken by the assessee were genuine or not.

(ii) Whether on the facts & in the circumstances of the case, the Ld. CIT(A) erred in law & on facts in not appreciating the fact that there is reference made by the AO as to how the assessee was linked to Sh. Himanshu Verma.

(iii) Whether on the facts & in the circumstances of the case, the Ld. CIT(A) erred in law & on facts in not appreciating the fact that the addition made by the AO is supported with evidences to conclude that the assessee has taken accommodation entries and the transaction was not genuine.

(iv) Whether on the facts & in the circumstances of the case, the Ld. CIT(A) erred in law & on facts in not appreciating the fact that the addition made by the AO on account of Commission paid is not without basis or justification.

The assessee was called absent in the case.

The Ld. DR took us through the brief factual matrix of the case. The Ld.CIT(A) through his order dated 27.11.2024 deleted the addition made by the Ld. AO qua the merits of the addition. The Ld. DR argued in favour of the order of AO. It was contended that the order has been made after carefully considering the varied facts of this case in the light of material available on records.

We have considered the arguments of the Ld. DR in the light of material available on records. We have examined the order of Ld. First Appellate Authority and are of the considered view that the order passed by the Ld. CIT(A) 27.11.2024 which has been assailed by the Revenue, has been passed after carefully considering the facts of the case and correct interpretation of law. We have noted that the ld. CIT(A) has while according relief to the assessee made following observations:-

“….6. Ground Nos. 1 to 5: The brief facts of this case are that the case was re-opened u/s 147 of the Act on the basis of information received on the Insight Portal that the appellant had taken accommodation entry from an entry provider Sh. Himanshu Verma. In the assessment order, AO has reproduced the information available on Insight Portal. An addition at Rs. 7 er. was made u/s 68 of the Act on the basis of the above information. An expenditure @2% as commission was also added to the income by the AO.

6.1 In the grounds of appeal under reference, appellant has contested that the assumption of jurisdiction u/s 147 is bad in law as the reasons to believe and the approval of higher authorities were never furnished to the appellant. No opportunity was granted to the appellant to peruse the reasons to believe and submit its objections thereon. Appellant has also contested strongly that the copy of material including copy of statement of Sh. Himanshu Verma which were relied upon by the AO were not provided to the appellant for confrontation. The submission of appellant is that the addition was made solely on the basis of information on Insight Portal without conducting any enquiry and without producing any cogent evidence that the amounts received were accommodation entries.

6.1.1 During the appellate proceedings, appellant has reproduced a copy of letters addressed to the AO requesting him to provide a copy of reasons recorded on the basis of which the case has been re-opened u/s 147 of the Act. However, a co